IFA consolidator AFH Financial Group has pulled out of a potential deal to buy advice network Lighthouse Group saying it is “disappointed” by Lighthouse’s approach to the bid.
In a scathing statement published today, AFH sys it does not now intend to make an offer for Lighthouse, after Lighthouse rejected a £17.4m takeover bid last week.
AFH notes there was a 35 per cent price movement in the shares of Lighthouse, which is listed on Aim, after an initial approach was made on 9 March.
The statement says the offer factored in Lighthouse’s “limited growth prospects” and that Lighthouse is having to hold about 50 per cent of its cash for “regulatory purposes”.
It also alludes to Lighthouse’s “inability to make further distributions or other non-trading payments from its regulated subsidiaries without FCA consent”.
The statement says the AFH board was disappointed by Lighthouse directors’ unwillingness to engage in takeover talks and by statements issued since by Lighthouse that it did not talk to shareholders before rejecting the deal.
AFH says it now cannot carry out appropriate due diligence on the deal so has pulled out.
AFH chief executive Alan Hudson says: “We are naturally disappointed with the reaction of Lighthouse to our indicative proposal which included a mix and match structure for individual Lighthouse shareholders.
“AFH, with its extensive track record of M&A to date, continues to progress its stated organic and acquisitive growth strategy and looks forward to updating the market in due course.”